Losing a job is difficult, regardless of how generous the retrenchment package may be.
While it might be difficult for organisations facing disruption to avoid layoffs, employers still have considerable control over how the process is handled. They can choose to provide only the minimum required support or take additional steps to reduce the financial and career impact on affected workers.
GovTech’s recent restructuring offers several useful lessons.
Earlier this week, the agency retrenched 93 employees in the first phase of a two-year workforce transformation. In total, between 7% and 9% of its approximately 3,900 employees, or around 300 workers, are expected to be affected.
While no retrenchment exercise is painless, there are several things GovTech appears to have done right that is also worth noting and learning from.
#1 Consider Alternatives Before Retrenching Employees
Retrenchment should not automatically be the first option when an employee’s existing role is no longer needed. GovTech first assessed whether affected employees could remain in their roles, move into other positions, or be retrained to develop the capabilities required under its new operating model.
This is an important distinction. An employee may still be capable and valuable even if the organisation no longer requires them in their current role. In fact, GovTech announced that 110 workers were placed in full-salary apprenticeships to prepare for new positions
Employers should therefore explore whether workers can be redeployed within the organisation before deciding to let them go.
#2 Engage The Union Early
GovTech engaged the Amalgamated Union of Statutory Board Employees early in the restructuring exercise. This gave the union time to work with the agency on alternatives such as retraining and redeployment. It also allowed the union to negotiate additional support for affected employees.
Early engagement is more useful than bringing the union in only after the retrenchment package has been finalised.
#3 Pay Meaningful Service-Based Retrenchment Benefits
Affected employees were offered one month’s salary for every year of service, capped at 25 years. For example, an employee earning $6,000 a month who had worked at GovTech for eight years could receive $48,000 from this component.
This service-based payment recognises the employee’s time and contributions to the organisation. It also provides some financial runway while the person searches for another job.
Retrenchment benefits should not be seen as a windfall. For affected workers, the money may have to cover several months of housing payments, insurance premiums, childcare expenses and other household commitments.
#4 Provide Additional Financial Support
In addition to the service-based payment, affected employees were offered an additional three months’ salary as an ex gratia payment.
Using the same example of an employee earning $6,000 a month, the additional three-month payment would amount to $18,000. Together with eight months of service-based compensation (assuming the person has worked at GovTech for eight years), the two components could provide $66,000 before accounting for other applicable payments.
This gives affected workers more time to look for an appropriate role instead of feeling pressured to accept the first available job.
Read Also: Forms Of Government Financial Support For Workers Affected By Retrenchment
#5 Compensate Employees Who Stay Longer
Some affected employees were asked to stay on to complete handovers or operate critical systems. These employees would receive an additional completion payment. GovTech said these employees would receive an additional completion payment.
Employees serving notice may be asked to transfer years of institutional knowledge or continue carrying important responsibilities even though they know they are leaving. Providing additional compensation recognises this effort and gives employees an incentive to remain until the agreed completion date.
#6 Account For Bonuses & Other Employee Benefits
The union also secured a pro-rated performance bonus for affected officers as part of the additional support negotiated with GovTech. This recognises that affected employees had worked for part of the relevant performance period before their roles were made redundant.
Employers carrying out a retrenchment should clearly explain how bonuses, unused leave and other applicable employment benefits will be treated. Whether these payments are due will depend on the employee’s contract, the company’s policies and the conditions attached to each benefit.
Responsible Retrenchment Should Help Workers Move Forward
Retrenchment support should not end with a severance payment.
Career coaches from NTUC’s Employment and Employability Institute were deployed to provide affected GovTech employees with personalised coaching and job-matching support. Close to 30 companies also offered more than 300 technology-related vacancies, while affected employees were invited to a curated technology career fair.
This matters because the real measure of a responsible retrenchment exercise is not only how much employees receive when they leave, but also how well they are supported in finding their next opportunity.
Employers may not always be able to avoid retrenchments. However, they can still reduce the financial and career disruption by exploring redeployment, offering meaningful retraining, providing fair compensation and connecting affected workers directly with potential employers.
GovTech’s approach does not make job loss painless. But it shows that retrenchment can be handled with greater care, practical support and respect for the people affected.
Photo Credit: iStock/daphnusia
